Click here for the latest coronavirus news, which the BDN has made free for the public. You can support our critical reporting on the coronavirus by purchasing a digital subscription or donating directly to the newsroom.
Both of Maine’s U.S. senators rolled out different bipartisan bills on Thursday aiming to reform the Paycheck Protection Program, which has given forgivable loans to small businesses to keep workers on payroll but has been criticized by some as inflexible.
The massive program, which was originally created as part of a $2.2 trillion stimulus package at the end of March and was later renewed, has sent more than $2.5 billion in loans to Maine businesses. According to a survey by the U.S. Census Bureau, 80 percent of Maine small businesses have applied and 63 percent have received money. The loans are forgivable, provided at least 75 percent of the funds are spent on payroll and the rest on other essentials.
But many business owners have expressed concerns about the terms. They include a June 30 deadline for businesses that accepted loans to return to full employment and forgiveness restrictions that do not translate well to very small businesses for which payroll may not account for 75 percent of expenses.
Maine’s senators introduced legislation on Thursday to liberalize the program in ways that were hailed by business interests. It looked possible that at least one proposal would face a Thursday vote, but the Senate adjourned without addressing them and they will be delayed until after Memorial Day. Bipartisan agreement may be a sign that change is coming to the program.
The plan backed by Sen. Susan Collins, R-Maine, would give borrowers 16 weeks to use their loan funds, instead of eight weeks, giving businesses an additional two months to return to capacity. It also would allow the money to be used on personal protective equipment and adaptations that businesses might make to reopen.
At the same time, businesses that maintained payroll for eight weeks under the terms of the earlier bill would not lose forgiveness and the bill ensures lenders would be held harmless if they followed guidance for the program that was later changed.
In a floor speech Thursday, Collins said the new bill would strengthen the program to reflect the “evolving nature” of the pandemic. She, along with Sen. Marco-Rubio, R-Florida, was the original author of the program. Rubio and Sens. Ben Cardin, D-Maryland, and Jeanne Shaheen, D-New Hampshire, are co-sponsoring the reform bill with Collins.
A more liberal proposal from senators including Angus King, I-Maine, would extend the deadline for businesses to use their funds from eight weeks to 24 weeks and eliminate the requirement that 75 percent of the funds be used on payroll for the loan to be forgiven.
It breaks most from Collins’ proposal by aligning the program’s deadline with a beefed-up federal unemployment benefit of $600 weekly that will last through July. Since the program is paying many more than they made at work, employers are finding it difficult to call workers back as the economy reopens.
Backers to King’s bill include Sens. Steve Daines, R-Montana, Tim Kaine, D-Virginia and Cory Gardner, R-Colorado. King said the proposal was also supported by organizations including the National Federation of Independent Business and the Maine State Chamber of Commerce. A similar measure was part of a $3 trillion relief bill advanced by House Democrats this week and exists also as a standalone bill in the lower chamber.
Dana Connors, the CEO of the Maine State Chamber of Commerce, praised the direction that both bills signaled for the program, which he called “a godsend” for businesses. He noted that the June 30 deadline for the Payroll Protection Program would cause difficult decisions for businesses that were not intended when federal aid programs were designed.
“It’s a tough responsibility to meet given the circumstances we’re currently in,” he said.
Watch: Maine gets funding for coronavirus testing